Regulatory T-cells (Tregs) play a pivotal role in the maintenance of immune tolerance and hold great promise as cell therapy for a variety of immune-mediated diseases. However, the cellular mechanisms that regulate Treg maintenance and homeostasis have yet to be fully explored. While Tregs express Granzyme-B (GrB) to suppress effector T-cells via direct-killing, the mechanisms by which they protect themselves from GrB-mediated self-inflicted damage are unknown. We show, for the first time, that both iTregs and nTregs increase their intracellular expression of GrB and its endogenous inhibitor, Serine Protease Inhibitor-6 (Spi6) upon activation. Sub-cellular fractionation and measurement of GrB activity in the cytoplasm of Tregs show that activated Spi6−/− Tregs had significantly higher cytoplasmic GrB activity. We observed an increase in GrB-mediated apoptosis in Spi6−/− nTregs and impaired suppression of alloreactive T-cells in vitro. Spi6−/− Tregs were rescued from apoptosis by the addition of a GrB inhibitor (Z-AAD-CMK) in vitro. Furthermore, adoptive transfer experiments showed that Spi6−/− nTregs were less effective than WT nTregs in suppressing Graft-versus-host-disease (GVHD) due to their impaired survival, as shown in our in vivo bioluminescence imaging. Finally, Spi6-deficient recipients rejected MHC class II-mismatch heart allografts at a much faster rate and showed a higher rate of apoptosis among Tregs, as compared to WT recipients. Our data demonstrate, for the first time, a novel role for Spi6 in Treg homeostasis by protecting activated Tregs from GrB-mediated injury. These data could have significant clinical implications for Treg-based therapy in immune-mediated diseases.